The Delhi High Court held interest on funds linked to project setup and earmarked for machinery purchase cannot be taxed separately. Bench of Justices V Kameswar Rao and Vinod Kumar ruled such income must be capitalized reducing overall project cost
The Income Tax Appellate Tribunal held that though gifts from relatives are generally exempt under Section 56(2)(x), exemption fails without proof. In Varun’s case, Rs 10.43 lakh received on his anniversary was taxed due to inadequate evidence of relationship and source.
